The debtor brought an application for court approval of its proposal under the Bankruptcy and Insolvency Act.
Two secured creditors opposed the proposal because it contained a clause releasing the debtor's principal from his personal guarantees.
The court refused to approve the proposal, finding that the release of the guarantor was not necessary for the restructuring and did not benefit the general body of creditors.
The court also found that the proposal lacked good faith as the release clause was not prominently disclosed.
